State Office of Risk Management v. Maria E. Olivas

509 S.W.3d 499, 2016 WL 3068136, 2016 Tex. App. LEXIS 5704
Court of Appeals of Texas·Decided May 27, 2016·No. 08-14-00071-CV·Published·Cited by 3 cases

Opinion

OPINION

ANN CRAWFORD McCLURE, Chief Justice

An attorney successfully representing a worker before the Division of Worker’s Compensation (DWC) may be entitled to attorney’s fees, not to exceed 25% of the claimant’s recovery, which is paid out of the worker’s recovery. 1 If the insurance carrier appeals the DWC’s determination to a trial court, and loses, the claimant’s attorney might be entitled to an attorney’s fees award to be paid by the insurance carrier (and not out of the worker’s recovery). 2 The State’s Office of Risk Management (SORM), which handles state employee worker’s compensation claims, contends that under the relevant statutory language, and its immunity, that if it appeals and loses, the worker’s attorney is entitled to no attorney’s fees at all, whether paid directly by it, or out of the worker’s recovery. And assuming we do not subscribe to that construction of the statute, SORM alternatively concludes that the manner in which the attorney’s fees were calculated here was error. We begin with a brief factual history of the case.

FACTUAL SUMMARY

Maria Olivas prevailed at the DWC in a work injury claim involving the total and permanent loss of both hands. 3 Oli-vas pursued the claim against SORM which is a statutory agency of the State of Texas authorized to administer state employee worker’s compensation claims. Tex.Lab.Code Ann. § 412.011 (West 2015). The matter had been pending for some time. Olivas hired her attorney in July 2008. During the course of the proceedings, there were twelve benefit review conferences and six contested case hearings, resulting in six appeals to the DWC’s Appeals Panel, and two suits for judicial review.

This particular case arose out of a final DWC determination on December 27, 2011 which SORM appealed to the trial court. A jury was empaneled almost two years later and found against SORM, determining that Olivas was entitled to lifetime income benefits for the total and permanent loss of both of her hands.

A final judgment awarding Olivas lifetime income benefits was signed on January 22, 2014. That judgment has not been challenged on appeal. Before us is a separate order of the trial court, signed within thirty days of the final judgment, awarding an attorney’s fee of $139,338 to be paid out of Olivas’ lifetime income benefits, 4

*502 Olivas’ counsel filed an attorney’s fee application after the trial of the case. The application was supported in part by the attorney’s affidavit which swore that the facts stated in the application itself were correct, and further averred that he had a 25% contingency fee agreement with Oli-vas. The application recited the number of prior administrative proceedings before the DWC. With respect to this litigation, Olivas’ attorney referenced attending two depositions, and performing all the functions usually attendant to litigating a case (interviewing witnesses, filing pleadings, reviewing medical records along with other documentary evidence, and obtaining records in admissible form). The trial itself took three days. But neither the application nor the affidavit provided the total number of hours expended, the amount of time for each of the tasks performed, or a billing rate for the attorney or his staff. The application claimed that a 25% contingency is customary in the local market for this type of case. The application further contended the claim for lifetime benefits involved unique and novel questions of law, and the amount at issue was substantial.

The affidavit then set out the benefits obtained for Olivas. Pursuant to the jury’s finding, Olivas would be paid benefits of $755.36 per week for life. Her life expectancy was estimated at 27.18 years as per a Center for Disease Control’s Mortality Table. Multiplying the weekly benefits times her life expectancy yielded a gross total of future payments of $1,067,323.68. The application then referenced a Texas Department of Insurance “Discount Rate,” which when applied, calculated the present value of the future payments at $684,552.60. Applying the 25% contingency to that present value figure yielded a total of $171,138 in attorney’s fees. The affidavit then stated that $31,800 had previously been paid for the prior proceedings before the DWC. After deducting the previous payments, the net remaining fee was $139,338.

Olivas also signed an affidavit acknowledging that she agreed to a 25% contingency fee. She further swore: “I understand that the State Office of Risk Management will reduce my weekly benefits by 25% until such time as it has recouped the commuted fee of $139,338.00 in full. This fee is a reasonable and necessary attorney’s fee in this matter and I request that the sum of $139,338.00 be approved and paid to the Law Office of Charles L. Scruggs, P.C.” In other words, and important to this case, the attorney’s fee was to be paid out of Olivas’ benefits and she agreed to the amount of the fee.

SORM opposed the fee application for the reasons discussed below. After a non-evidentiary hearing, the trial court ordered the attorney’s fee commuted to $139,338 and paid immediately to the attorney, but gave SORM the right to reduce all future payments to Olivas by 25% until the total amount of the commuted fee was recouped. The order states that the trial court considered seven factors that are set forth in Tex.Lab.Code Ann. § 408.221(d) in awarding the fees. The order concluded that the 25% contingency was reasonable and necessary. SORM challenges the order on a number of grounds, each of which requires us to construe various provisions of the Texas Worker’s Compensation Act. *503 We begin with our framework for statutory construction.

STANDARD OF REVIEW

Statutory construction is a legal question that we review de novo. In re Ready-One Industries, Inc., 394 S.W.3d 680, 684 (Tex.App.-El Paso 2012, orig. proceeding), citing Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.2009). Our primary focus in statutory interpretation is to give effect to legislative intent, considering the language of the statute, as well as its legislative history, the objective sought, and the consequences that would flow from alternative constructions. Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 383 (Tex.2000). We seek that intent “first and foremost” in the statutory text. Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83, 85 (Tex.2006). We consider the words in context, and not in isolation. In re Office of the Attorney General,

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State Office of Risk Management v. Maria E. Olivas, 509 S.W.3d 499, 2016 WL 3068136, 2016 Tex. App. LEXIS 5704 (Tex. Ct. App. 2016).

509 S.W.3d 499 (State Office of Risk Management v. Maria E. Olivas) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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